Martin Lewis: Don’t fall victim to the great energy price hike

This is an urgent energy warning: gas and electricity price hikes are back. To beat this you need to act at speed. For the first time in two years, some of the big six energy companies have announced major price hikes.

This is an urgent energy warning: gas and electricity price hikes are back.To beat this you need to act at speed.

For the first time in two years, some of the big six energy companies have announced major price hikes. British Gas will increase gas and electricity prices by an average of seven per cent on December 10, and Scottish & Southern will hike gas prices by 9.4 per cent on average from December 1.

Industry insiders believe more will follow suit, blasting energy prices sky-high at the worst time possible. This is an urgent plea to take a few minutes, save yourself £100s, and sort it now before it’s too late.

What’s happened?

While British Gas’s and S&S’s price hike will directly affect millions of customers, tens of millions more are likely to be hit too, as these shock price rises have changed the game. Beforehand the general consensus was there’d be some small price rises, up to five per cent-ish, in January. Now insiders believe companies could bring in bigger hikes much earlier.

After all, energy companies have a herd mentality; when one moves others follow.

That’s why in the past, when one company raised prices I yelled “don’t switch”, as, do a comparison, and you could find yourself leaving a company that had raised its prices for another that was just about to do so.

One of the big six energy companies, EDF, has pledged that it won’t hike standard energy prices before March 2011. Yet the likelihood is this announcement just forestalls its price rise until March - almost certainly as an attempt to retain competitive advantage in the short-term and attract switchers.

The truth is if you are on EDF’s or any other companies’ standard tariff anyway, you’re already likely to pay hundreds of pounds more a year than you would by switching to specialist online billed deals.

Urgent action you need take

These days we have a two-tiered pricing system. Most people are on standard tariffs which, in the average home, means bills of around £1,200 a year. Yet the energy-savvy only pay around £900 for the same usage, as they have special online billed tariffs which are massively cheaper. This £300 annual saving is available to anyone who is on the internet – all it means is you get billed by email rather than by paper (though don’t confuse it with having online access to your account – its specifically about how you’re billed). So if you’re not already on an online tariff, it’s worth switching as soon as possible.

Winter is coming

Although it takes minutes to find the cheapest tariff, changing over to it will usually take a couple of months. Switch now and by the end of December you should be on the new pricing. Leave it until the cold weather hits, and you’ll be paying more than you need to until spring. Cheap online tariffs are disappearing. Many of the cheapest tariffs get closed to new customers after a few months. Online tariffs should save even if rates go up.

Find your cheapest in five minutes

When you switch, it’s the same gas, the same electricity, the same safety – only price and customer service change, so it’s a no-brainer. To switch you just use a Consumer Focus approved comparison service, such as Energyhelpline, Energylinx and Uswitch, who operate online and over the phone. For a boost, go to comparison sites via my website www.moneysavingexpert.com/gaselec and you’ll get up to £30 cashback and a crate of wine. They do this as so many are switching, they fight for custom by offering incentives.